Author: ArkStream
Original link: https://mp.weixin.qq.com/s/pZnC7gQwxh3OXH-mcs52uw
Disclaimer: This article is a reprint. Readers can find more information by following the original link. If the author has any objections to the reprint format, please contact us and we will modify it to suit the author's request. This reprint is for informational purposes only and does not constitute investment advice or represent the views or positions of Wu Blockchain.
We are pleased to announce that ArkStream Capital invested an additional $10 million in Ethena in August 2025, adding to our long-term investment of $5 million in our initial round in December 2024. This increase in investment reflects our strong recognition of Ethena's structural breakthroughs in both product development and capital markets.
What makes us determined to increase our investment is not only the explosive growth in data, but also Ethena’s institutional innovation at the capital market level.
The flywheel of "dual track of currency and stock"
Over the past two years, Ethena has not only proven the product-market fit (PMF) of USDe but has also successfully integrated a purely crypto-native decentralized protocol with a capital vehicle configurable through US stocks into a "dual-track" flywheel for cryptocurrencies and stocks, achieving a critical transition to what we call Capital-Market Fit (CMF). This is not about short-term arbitrage, but about connecting protocol cash flow, governance, and external, compliant capital into a reusable capital structure.
Equity side (StablecoinX): Based on the merger with TLGY SPAC, the PIPE has increased its size from $360 million to a total of $895 million (with an additional $530 million in the latest round), with plans to list on the Nasdaq under "USDE." Upon closing, StablecoinX will hold over 3 billion ENA on its balance sheet. This round of funds will be used to purchase locked ENA from an Ethena Foundation subsidiary. Simultaneously, the Foundation subsidiary will commission a third-party market maker to execute approximately $310 million in open market spot buybacks over the next 6-8 weeks. The pace is: $5 million per day if ENA is above $0.70; $10 million per day if ENA is below $0.70 or if it drops by more than 5% in a single day. This total is expected to represent 13% of the circulating supply, having already acquired approximately 7.3% in the first PIPE round. Furthermore, the Ethena Foundation retains a veto over any sell-off of StablecoinX. This locks equity financing and the demand side of on-chain governance assets together, forming an institutionalized channel of "compliant capital → governance token demand".
On the token side (ENA): USDe has reached $12 billion in market capitalization, ranking third among stablecoins. The protocol has generated over $500 million in historical revenue, and Aave's exposure to USDe-related assets has reached approximately $4.7 billion. Discussions on the sENA fee switch are accelerating: the Ethena Risk Committee has established clear activation metrics (USDe circulation, cumulative protocol revenue, and CEX coverage). With the listing of USDe on Binance, the final key condition has been met, and the protocol now has a mechanism in place to allocate a portion of its revenue to sENA. This means the token's cash flow capture is entering a substantial opening phase, and ENA's value proposition will shift from relying solely on growth expectations to being directly anchored to protocol cash flow.
External Signals (DAT Reserves): Mega Matrix (NYSE: MPU) has announced that it will designate ENA as its primary strategic reserve for DAT, effectively using its public company's balance sheet to "buy" the protocol long-term. Simultaneously, Mega Matrix has submitted a $2 billion shelf registration to the SEC, reserving space for flexible financing in tranches over the next few years. This not only locks in ENA in asset allocation, but also sets a ceiling on financing instruments for "continuous increases" or related capital operations, providing external institutional support for long-term demand for ENA.
Unlike the "direct shell purchase + PIPE + ATM" arbitrage model, this three-point design forms a closed loop:
Equity financing → ENA demand/buyback → USDe expansion → Protocol cash flow growth (supporting valuation and refinancing) → DAT/institutional allocation → External structural buying → Flow back to both the coin and stock levels, ultimately benefiting both token holders and shareholders.
This is the first time that a DeFi protocol has entered the U.S. stock market through structured financial instruments. Ethena is transforming "protocol growth" into "institutional demand," making ENA's value capture more capital-resilient across cycles, which is also one of the core reasons why we continue to place heavy bets on it.
USDe: DeFi’s new benchmark interest rate
USDe uses a crypto-native delta-neutral mechanism to drive returns and is gradually being regarded by the market as the new benchmark interest rate for DeFi funds and the anchor of "risk-free assets":
Supply: By the end of August, it exceeded $12.5 billion, making it the third largest stablecoin.
Top lending exposure: Aave’s exposure to Ethena-related assets is $4.7 billion, demonstrating its tier-one liquidity position in the mainstream DeFi credit market.
Cross-chain scale: Cumulative transaction volume exceeds US$5.7 billion;
Return range: Through a delta-neutral strategy, it provides an annualized return of approximately 9–11%, which is considered the “risk-free rate” of DeFi.
· Agreement Revenue: Cumulative revenue exceeded US$500 million, with the highest revenue in a single week reaching US$13.4 million in August 2025.
When USDe is more widely used as a collateral and settlement asset, the positive feedback formed by its scale, liquidity and returns will further strengthen the governance and distribution value of ENA (including the value return brought about by potential fee-switch mechanisms).
The "backup" after stablecoins: From the income dollar to the settlement layer and capital layer
Stablecoins are not the end point, but the foundation for cash flow and distribution. Ethena's "back-up" is reflected in the coordinated expansion of distribution and settlement:
Distribution layer: Let "income dollars" reach institutions and billions of users
iUSDe (Institutional Edition): Through the transfer-restricted contract format, the income nature of sUSDe is integrated into the TradFi distribution network in a compliant packaging, reducing operational and compliance friction for institutions.
tsUSDe (Telegram/TON): Through in-depth collaboration with TON, tsUSDe is natively embedded in the Telegram wallet ecosystem, targeting billions of devices and making USD earnings an instantly distributable internet-native asset.
Why it matters: The “light compliance + platform-level entry” on the distribution side can enhance the positive feedback loop of “USDe scale → lending exposure → protocol revenue”; the $4.7 billion in related risk positions on Aave is already validating this main line.
Settlement Layer: Converge turns USDe into a native gas/settlement asset
Converge Chain: Co-built with Securitize, a modular combination of Arbitrum + Celestia, supports USDe/USDtb as gas and settlement assets, and uses ENA staking to enhance security, compatible with both permissioned and permissionless applications.
Why it matters: When the "yield dollar" becomes the basic settlement fuel, the network effect of USDe rises from a financial primitive to a transaction routing/accounting unit; this gives Ethena the opportunity to undertake high-value-added businesses after stablecoins, such as RWA issuance, institutional settlement, market making collateral, etc.
Our judgment: This combination of "institutional compliance portal + super distribution front-end + dedicated settlement chain" significantly improves the availability and usability of USDe, and brings continuous cash flow spillover to ENA across scenarios and customer groups.
Risks and moats: transparent mechanisms + decentralized structures
Our increase in Ethena holdings is also based on our review of its risk governance and transparency:
Trading risk: USDe relies on a "long spot, short perpetual" basis/funding framework. Extreme market conditions can compress returns or even lead to temporary inversions. Ethena mitigates this risk through multiple exchanges, diversified counterparties, and dynamic hedging parameters.
Systemic spillover: As USDe becomes a leading collateral asset, the risk governance of major lending protocols (raising risk weights and governance parameters) is also being synchronized.
ArkStream's investment rationale
From the short term to the long term, Ethena's investment logic is very clear:
Short-term (tactical): USDe has grown into DeFi's largest yield-generating capital reservoir. With $12.5 billion in circulation and $4.7 billion in exposure on Aave, it holds the status of a "primary collateral asset" in the DeFi lending market. Furthermore, USDe's 9-11% annualized yield is considered by the market to be a near-risk-free rate, making it a core anchor for liquidity aggregation. The logic behind this phase is that the continued growth of scale and returns will make USDe a funding hub for the entire ecosystem, providing a stable source of cash flow for the protocol.
Mid-term (structural): Ethena's capital structure is fully integrated with traditional markets. Through SPAC → PIPE → De-SPAC, USDe/ENA is tied into the US stock market compliance framework. StablecoinX, with its cumulative $895 million PIPE and 3 billion ENA on its balance sheet, has established a systemic channel for governance token demand. Meanwhile, Mega Matrix's DAT reserves and $2 billion shelf registration further institutionalize external capital purchases. The logic of this phase is to use structured financial instruments to lock in equity financing and token demand, thereby aligning ENA's valuation with traditional capital markets.
Long-term (paradigm level): The most critical turning point came with the official implementation of the sENA fee switch. The three activation metrics set by the Risk Committee (USDe circulation, cumulative revenue, and CEX coverage) have now all been met, particularly with the listing of USDe on Binance, which fulfilled the final coverage requirement. This means Ethena is now in a position to allocate a portion of the protocol's revenue directly to sENA. From this point forward, ENA will shift from a "growth narrative-driven" to a "cash flow-driven" model, becoming the first stablecoin governance token to directly capture the protocol's actual cash flow. Combined with the long-term external buying generated by the DAT reserve, ENA's value will be supported by a dual-engine drive of "endogenous cash flow distribution + external structured allocation." We believe that within this framework, ENA has the potential to evolve into a "quasi-gold reserve" asset for stablecoin governance, achieving a cross-cycle positive cycle between protocol cash flow and the capital market.
Conclusion
ArkStream believes that Ethena is more than just a stablecoin protocol; it serves as a bridge between crypto-native yields and traditional capital markets. When the product's base interest rate is set correctly and its capital structure provides institutional access to US equities, Ethena's value capture is scalable across multiple cycles. Our decision to invest at this time is a decisive step in supporting Ethena's transition from a PMF to a CMF.
Original link: https://mp.weixin.qq.com/s/pZnC7gQwxh3OXH-mcs52uw
Disclaimer: This article is a reprint. Readers can find more information by following the original link. If the author has any objections to the reprint format, please contact us and we will modify it to suit the author's request. This reprint is for informational purposes only and does not constitute investment advice or represent the views or positions of Wu Blockchain.
We are pleased to announce that ArkStream Capital invested an additional $10 million in Ethena in August 2025, adding to our long-term investment of $5 million in our initial round in December 2024. This increase in investment reflects our strong recognition of Ethena's structural breakthroughs in both product development and capital markets.
What makes us determined to increase our investment is not only the explosive growth in data, but also Ethena’s institutional innovation at the capital market level.
The flywheel of "dual track of currency and stock"
Over the past two years, Ethena has not only proven the product-market fit (PMF) of USDe but has also successfully integrated a purely crypto-native decentralized protocol with a capital vehicle configurable through US stocks into a "dual-track" flywheel for cryptocurrencies and stocks, achieving a critical transition to what we call Capital-Market Fit (CMF). This is not about short-term arbitrage, but about connecting protocol cash flow, governance, and external, compliant capital into a reusable capital structure.
Equity side (StablecoinX): Based on the merger with TLGY SPAC, the PIPE has increased its size from $360 million to a total of $895 million (with an additional $530 million in the latest round), with plans to list on the Nasdaq under "USDE." Upon closing, StablecoinX will hold over 3 billion ENA on its balance sheet. This round of funds will be used to purchase locked ENA from an Ethena Foundation subsidiary. Simultaneously, the Foundation subsidiary will commission a third-party market maker to execute approximately $310 million in open market spot buybacks over the next 6-8 weeks. The pace is: $5 million per day if ENA is above $0.70; $10 million per day if ENA is below $0.70 or if it drops by more than 5% in a single day. This total is expected to represent 13% of the circulating supply, having already acquired approximately 7.3% in the first PIPE round. Furthermore, the Ethena Foundation retains a veto over any sell-off of StablecoinX. This locks equity financing and the demand side of on-chain governance assets together, forming an institutionalized channel of "compliant capital → governance token demand".
On the token side (ENA): USDe has reached $12 billion in market capitalization, ranking third among stablecoins. The protocol has generated over $500 million in historical revenue, and Aave's exposure to USDe-related assets has reached approximately $4.7 billion. Discussions on the sENA fee switch are accelerating: the Ethena Risk Committee has established clear activation metrics (USDe circulation, cumulative protocol revenue, and CEX coverage). With the listing of USDe on Binance, the final key condition has been met, and the protocol now has a mechanism in place to allocate a portion of its revenue to sENA. This means the token's cash flow capture is entering a substantial opening phase, and ENA's value proposition will shift from relying solely on growth expectations to being directly anchored to protocol cash flow.
External Signals (DAT Reserves): Mega Matrix (NYSE: MPU) has announced that it will designate ENA as its primary strategic reserve for DAT, effectively using its public company's balance sheet to "buy" the protocol long-term. Simultaneously, Mega Matrix has submitted a $2 billion shelf registration to the SEC, reserving space for flexible financing in tranches over the next few years. This not only locks in ENA in asset allocation, but also sets a ceiling on financing instruments for "continuous increases" or related capital operations, providing external institutional support for long-term demand for ENA.
Unlike the "direct shell purchase + PIPE + ATM" arbitrage model, this three-point design forms a closed loop:
Equity financing → ENA demand/buyback → USDe expansion → Protocol cash flow growth (supporting valuation and refinancing) → DAT/institutional allocation → External structural buying → Flow back to both the coin and stock levels, ultimately benefiting both token holders and shareholders.
This is the first time that a DeFi protocol has entered the U.S. stock market through structured financial instruments. Ethena is transforming "protocol growth" into "institutional demand," making ENA's value capture more capital-resilient across cycles, which is also one of the core reasons why we continue to place heavy bets on it.
USDe: DeFi’s new benchmark interest rate
USDe uses a crypto-native delta-neutral mechanism to drive returns and is gradually being regarded by the market as the new benchmark interest rate for DeFi funds and the anchor of "risk-free assets":
Supply: By the end of August, it exceeded $12.5 billion, making it the third largest stablecoin.
Top lending exposure: Aave’s exposure to Ethena-related assets is $4.7 billion, demonstrating its tier-one liquidity position in the mainstream DeFi credit market.
Cross-chain scale: Cumulative transaction volume exceeds US$5.7 billion;
Return range: Through a delta-neutral strategy, it provides an annualized return of approximately 9–11%, which is considered the “risk-free rate” of DeFi.
· Agreement Revenue: Cumulative revenue exceeded US$500 million, with the highest revenue in a single week reaching US$13.4 million in August 2025.
When USDe is more widely used as a collateral and settlement asset, the positive feedback formed by its scale, liquidity and returns will further strengthen the governance and distribution value of ENA (including the value return brought about by potential fee-switch mechanisms).
The "backup" after stablecoins: From the income dollar to the settlement layer and capital layer
Stablecoins are not the end point, but the foundation for cash flow and distribution. Ethena's "back-up" is reflected in the coordinated expansion of distribution and settlement:
Distribution layer: Let "income dollars" reach institutions and billions of users
iUSDe (Institutional Edition): Through the transfer-restricted contract format, the income nature of sUSDe is integrated into the TradFi distribution network in a compliant packaging, reducing operational and compliance friction for institutions.
tsUSDe (Telegram/TON): Through in-depth collaboration with TON, tsUSDe is natively embedded in the Telegram wallet ecosystem, targeting billions of devices and making USD earnings an instantly distributable internet-native asset.
Why it matters: The “light compliance + platform-level entry” on the distribution side can enhance the positive feedback loop of “USDe scale → lending exposure → protocol revenue”; the $4.7 billion in related risk positions on Aave is already validating this main line.
Settlement Layer: Converge turns USDe into a native gas/settlement asset
Converge Chain: Co-built with Securitize, a modular combination of Arbitrum + Celestia, supports USDe/USDtb as gas and settlement assets, and uses ENA staking to enhance security, compatible with both permissioned and permissionless applications.
Why it matters: When the "yield dollar" becomes the basic settlement fuel, the network effect of USDe rises from a financial primitive to a transaction routing/accounting unit; this gives Ethena the opportunity to undertake high-value-added businesses after stablecoins, such as RWA issuance, institutional settlement, market making collateral, etc.
Our judgment: This combination of "institutional compliance portal + super distribution front-end + dedicated settlement chain" significantly improves the availability and usability of USDe, and brings continuous cash flow spillover to ENA across scenarios and customer groups.
Risks and moats: transparent mechanisms + decentralized structures
Our increase in Ethena holdings is also based on our review of its risk governance and transparency:
Trading risk: USDe relies on a "long spot, short perpetual" basis/funding framework. Extreme market conditions can compress returns or even lead to temporary inversions. Ethena mitigates this risk through multiple exchanges, diversified counterparties, and dynamic hedging parameters.
Systemic spillover: As USDe becomes a leading collateral asset, the risk governance of major lending protocols (raising risk weights and governance parameters) is also being synchronized.
ArkStream's investment rationale
From the short term to the long term, Ethena's investment logic is very clear:
Short-term (tactical): USDe has grown into DeFi's largest yield-generating capital reservoir. With $12.5 billion in circulation and $4.7 billion in exposure on Aave, it holds the status of a "primary collateral asset" in the DeFi lending market. Furthermore, USDe's 9-11% annualized yield is considered by the market to be a near-risk-free rate, making it a core anchor for liquidity aggregation. The logic behind this phase is that the continued growth of scale and returns will make USDe a funding hub for the entire ecosystem, providing a stable source of cash flow for the protocol.
Mid-term (structural): Ethena's capital structure is fully integrated with traditional markets. Through SPAC → PIPE → De-SPAC, USDe/ENA is tied into the US stock market compliance framework. StablecoinX, with its cumulative $895 million PIPE and 3 billion ENA on its balance sheet, has established a systemic channel for governance token demand. Meanwhile, Mega Matrix's DAT reserves and $2 billion shelf registration further institutionalize external capital purchases. The logic of this phase is to use structured financial instruments to lock in equity financing and token demand, thereby aligning ENA's valuation with traditional capital markets.
Long-term (paradigm level): The most critical turning point came with the official implementation of the sENA fee switch. The three activation metrics set by the Risk Committee (USDe circulation, cumulative revenue, and CEX coverage) have now all been met, particularly with the listing of USDe on Binance, which fulfilled the final coverage requirement. This means Ethena is now in a position to allocate a portion of the protocol's revenue directly to sENA. From this point forward, ENA will shift from a "growth narrative-driven" to a "cash flow-driven" model, becoming the first stablecoin governance token to directly capture the protocol's actual cash flow. Combined with the long-term external buying generated by the DAT reserve, ENA's value will be supported by a dual-engine drive of "endogenous cash flow distribution + external structured allocation." We believe that within this framework, ENA has the potential to evolve into a "quasi-gold reserve" asset for stablecoin governance, achieving a cross-cycle positive cycle between protocol cash flow and the capital market.
Conclusion
ArkStream believes that Ethena is more than just a stablecoin protocol; it serves as a bridge between crypto-native yields and traditional capital markets. When the product's base interest rate is set correctly and its capital structure provides institutional access to US equities, Ethena's value capture is scalable across multiple cycles. Our decision to invest at this time is a decisive step in supporting Ethena's transition from a PMF to a CMF.
